NEC have been a small cell solution provider for several years, with many trial and live deployments using Ubiquisys small cells and their own gateway. Martin leads their business development activities in EMEA and is well placed to share views on the region's current market direction. He's spotted an interesting new commercial development for MVNOs, believes there is still plenty of mileage for 3G in the medium term and sees strong growth in both residential and enterprise sectors.
With growing interest in Metrocells, do you foresee 3G or LTE being deployed first?
"Clearly, operators are investing in LTE overall. There is plenty of evaluation work and many want to demonstrate it to ensure their brand is competitive. A number have (mostly small scale) commercial operations.
"However 3G will continue to be the main driver for some time. That's partly because LTE is still very new technology, which means it will be more expensive because it's early in the cost/lifecycle curve. By contrast, 3G has been around for quite some time – 10 years – and so has bottomed out on the cost curve for both devices/smartphones and infrastructure. Substantial investment and subsidies have already been made into 3G. This means it continues to make most sense for operators, although local conditions and business environment may dictate otherwise."
How serious is the demand for small cells?
"It's becoming fairly serious now, with many operators limited by the constraints of their spectrum allocation. Small cells offer a quick and effective means of boosting their macro network capacity by offloading traffic at known hotspot areas, especially indoors.
"Many operators are now actively using, or planning to use, Wi-Fi as a complementary option. Ultimately, 3G and Wi-Fi will become inseparable in some deployments. 3G, operating in licensed spectrum and with full end-to-end network control, makes it easier to offer a known Quality of Service (QoS) to the end customer. This may or may not be used, depending on the availability of an API to access it, providing a better user experience for VoIP, Video and data critical services. Wi-Fi can be used alongside, especially for less latency sensitive applications, although not every operator will choose to adopt it.
"As little as a year or 18 months ago, this was not the case. Today, all operators I've spoken with have either deployed small cells or have them on their roadmap. As one of my previous managers might have commented, the market direction is going "up and to the right" with strong growth forecasts underpinned by operator engagement."
So which market segment is seeing the strongest opportunity for growth?
"That's a really difficult question, and the answer continues to change. A common flavour is strong growth on the enterprise side of the business, which is higher up the list than a year ago.
"60-70% of calls are made indoors, and these are more difficult to serve from outdoor macrocells – they take up more capacity because of the need to penetrate into the building. So from a network offload point of view, it makes sense to address these.
"In terms of sheer volume, I'd expect the residential segment will be the biggest and is growing the most rapidly. In terms of value, that's much more difficult to quantify, but I'd reiterate that I do see a lot more interest in enterprise these days."
I see you've added SpiderCloud enterprise solution to your portfolio. Does this replace Ubiquisys?
"It's not an either/or – both can serve the Enterprise market. We've been evaluating SpiderCloud's solution for some time and believe this is clearly good in high traffic situations.
"In many large offices today, operators have installed DAS (Distributed Antenna Systems), which are custom designed, expensive and require specialist RF staff to plan and tune the system. 2cm thick co-ax cabling has to be run without tight turns, punching holes through concrete and causing all end of disruption for weeks. By contrast, a series of small cells connected by Power-over-Ethernet can be installed in a matter of days – one of our large installations took just 4 nights to complete – and used less skilled installers.
"These solutions challenge the market currently served by DAS vendors. They are not only cost effective, but operations departments can scale to handle many more installations because limited technical skills are required to deal with them.
"We also continue to offer Ubiquisys small cells from a diverse and competitive range of manufacturers.
"This lower cost and scalable approach may allow some operators to engage in a "landgrab" - pushing out competitors by signing up more enterprise/business customers. Few if any businesses would install systems from more than one operator, and once installed are less likely to switch.
You have your own Small Cell gateway. Do you think operators will remain with a single vendor gateway in the future, adopting Iu-h fully to ensure wide compatibility with small cell products?
"Operators can today share the same gateway across residential, enterprise and metrocell deployments. A few even share the same gateway to serve operations in multiple countries.
"As deployments grow in size, multiple gateway installations will be used to share the load. Iu-h is indeed becoming more prevalent, but I think it likely that operators may choose to have small cell gateways from more than one vendor in the long term.
"We've also got the capability to handle Wi-Fi within our gateway, and are actively trialling this feature with SpiderCloud in the enterprise space today. We are also seeing some demand for this in residential small cells too, especially where the same network operator supplies both mobile and fixed line services. Carrier Wi-Fi in metrocells is coming, but it's early days for that."
What are NEC's plans for LTE small cells?
"We are still evaluating our approach. It's unclear when LTE small cells will hit serious volume in the EMEA region, so we remain engaged and will ensure that we can offer suitable and appropriate product when the market timing is right.
"LTE macrocells will be deployed first, to provide initial service, with the long term likely to include a combination of 3G/LTE and Wi-Fi using small cells for capacity and high performance."
So won't the lack of your own products be a disadvantage?
"Our approach is primarily as a system integrator rather than developing all our own products. While some criticise us for this, we feel this gives us a competitive advantage, allowing us to be more responsive to changing market needs by expanding our portfolio with partners that offer the most appropriate products at that time. Multi-sourcing also allows us to be competitively priced.
"We've often been called in to resolve problems where network operators or other vendors have tried to launch small cell services themselves. There are an enormous range of activities and skillsets required to do this, and we bring hard won experience from operations in many countries. In situations where the only guarantee in life is change, we reconcile being a large company with being quick to respond."
Are there any other emerging opportunities in the small cell marketplace?
"We've been speaking recently with a number of MVNOs (service providers who don't run their own networks). The price point of small cells makes them attractive, by allowing an MVNO to directly offload and handle a substantial proportion of the customer's traffic in enterprise or residential small cells. The customer receives a better service – full 5 bars and high speed data – while the MVNO pays less to the host cellular network operator.
"I think we may expect to hear some industry announcements about this business model in the year ahead."